Rate 5 years Bearing Interest
Rate
Notes $’000 $’000 $’000 $’000 $’000 $’000 %
Financial assets
Cash 8a 38,034 – – – – 38,034 2.00
Receivables 8b – 2 8 62 45,742 45,814 5.75
Investments 8c 205,000 – – – – 205,000 5.98
Other 8d – – – – 8,788 8,788 –
Total financial assets 243,034 2 8 62 54,530 297,636
Financial liabilities
Provisions & payables 11b/c – – – – 120,114 120,114 –
Other debt 10b – – – – – – –
Leases 10a 66,122 – – – – 66,122 7.60
Total financial liabilities 66,122 – – – 120,114 186,236
Net financial assets/
(liabilities) 176,912 2 8 62 (65,584) 111,400
Financial Statements
179
Financial Statements
30 June 2000
Fixed interest maturing in:
Floating 1 year 1 to 5 More Non- Total Weighted Interest or less years than Interest Average
Rate 5 years Bearing Interest
Rate
Notes $’000 $’000 $’000 $’000 $’000 $’000 %
Financial assets
Cash 8a 119,664 – – – – 119,664 5.00
Receivables 8b – 11 40 42 77,397 77,490 5.48
Investments 8c 370,000 – – – – 370,000 5.90
Other 8d – – – – 489 489 –
Total financial assets 489,664 11 40 42 77,886 567,643
Financial liabilities
Provisions and payables 11b – – – – 30,129 30,129 –
Other debt 10b 91,307 17,239 85,500 84,109 513 278,668 8.96
Leases 10a 72,808 – – – 4,382 77,190 6.50
Total financial liabilities 164,115 17,239 85,500 84,109 35,024 385,987
Net financial assets/
(liabilities) 325,549 (17,228) (85,460) (84,067) 42,862 181,656
DEPARTMENTOFFINANCEANDADMINISTRATIONANNUALREPORT 2000–2001
180
Fixed interest maturing in:
Floating 1 year 1 to 5 More Non- Total Weighted Interest or less years than Interest Average
Rate 5 years Bearing Interest
Rate
Notes $’000 $’000 $’000 $’000 $’000 $’000 %
Financial assets
Cash 20a (832,168) – – – – (832,168) 2.00
Receivables 20b – 30,080 48,856 330,637 45,633 455,206 4.36
Investments 20c – 2,201 10,867 32,611 – 45,679 6.43
Accrued revenue 20d – – – – 59,017 59,017 –
Total financial assets (832,168) 32,281 59,723 363,248 104,650 (272,266)
Financial liabilities Provisions and payables
(including interest) 23c 223 – – – 29,593 29,816 –
Other debt &
lease incentives 22b – – – – 720 720 –
Leases 22a 192,611 – – – – 192,611 –
Total financial liabilities 192,834 – – – 30,313 223,147
Net financial assets/
(liabilities) (1,025,002) 32,281 59,723 363,248 74,337 (495,413)
Financial Statements
181
Financial Statements
30 June 2000
Fixed interest maturing in:
Floating 1 year 1 to 5 More Non- Total Weighted Interest or less years than Interest Average
Rate 5 years Bearing Interest
Rate
Notes $’000 $’000 $’000 $’000 $’000 $’000 %
Financial assets
Cash 20a 987,784 – – – – 987,784 5.11
Receivables 20b 9,368,846 13,041 48,936 343,224 4,705 9,778,752 5.56
Investments 20c 48,290 – – – – 48,290 5.53
Accrued revenue 20d – – – – 80,295 80,295 –
Total financial assets 10,404,920 13,041 48,936 343,224 85,000 10,895,121
Financial liabilities Provisions and payables
(including interest) 23e – – – – 50,612 50,612 –
Other debt and lease
incentives 22b – – – – 775 775 –
Leases 22a 198,580 – – – – 198,580 5.83
Total financial liabilities 198,580 – – – 51,387 249,967
Net financial assets/
(liabilities) 10,206,340 13,041 48,936 343,224 33,613 10,645,154
DEPARTMENTOFFINANCEANDADMINISTRATIONANNUALREPORT 2000–2001
182
The Department’s maximum exposure to credit risk at reporting date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the Statement of Financial Position.
The Department has no significant exposures to any concentration of credit risk.
All figures referred to for credit risk do not take into account the value of any collateral or other security.
(d) Net Fair Value of Financial Assets and Liabilities
The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the Department approximates their carrying value.
The net fair value of other monetary financial assets and financial liabilities is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles.
Trade creditors and grant liabilities are short term in nature and their fair values are approximated by their carrying amounts.
There are a number of potential financial liabilities which may arise from certain contingencies disclosed in the Schedule of Contingencies. The value of the contingencies disclosed in the Schedule of Contingencies is an estimate of the fair value of the amount payable by the Department as consideration for the assumption of those contingencies.
The carrying amounts and net fair values of financial assets and liabilities at balance date are:
Asset and Liability Carrying Amounts
Agency 2000–01 1999–00
Carrying Net Fair Carrying Net Fair
Amount Value Amount Value
$’000 $’000 $’000 $’000
On-balance sheet financial instruments Financial assets
Cash 38,034 38,034 119,664 119,664
Receivables 45,814 45,814 77,490 77,490
Investments 205,000 205,000 370,000 370,000
Other 8,788 8,788 489 489
297,636 297,636 567,643 567,643
Financial liabilities
Provisions and payables 120,114 120,114 30,129 30,129
Other debt – – 278,668 278,668
Leases 66,122 66,122 77,190 77,190
186,236 186,236 385,987 385,987
Financial Statements
183
Financial Statements
Asset and Liability Carrying Amounts
Administered 2000–01 1999–00
Carrying Net Fair Carrying Net Fair
Amount Value Amount Value
$’000 $’000 $’000 $’000
On-balance sheet financial instruments Financial assets
Cash (832,168) (832,168) 987,784 987,784
Receivables 455,206 455,206 9,778,752 9,778,752
Investments 45,679 45,679 48,290 48,290
Accrued revenues 59,018 59,018 80,295 80,295
(272,265) (272,265) 10,895,121 10,895,121
Financial liabilities
Provisions and payables 29,816 29,816 50,612 50,612
Lease incentives 720 720 775 775
Leases 192,611 192,611 198,580 198,580
223,147 223,147 249,967 249,967
DEPARTMENTOFFINANCEANDADMINISTRATIONANNUALREPORT 2000–2001
184
Remote contingencies
Unquantifiable
General
The Department of Finance and Administration from time to time is required, on behalf of the Commonwealth, to accept liabilities not otherwise attributable to specific agencies.
The nature and existence of these liabilities, if any, may generally not be known and therefore not possible to quantify.
National Disaster Relief Arrangements
Payments are made to State Governments under specific criteria relating to costs incurred by the State Governments following natural disasters. The actual level of payments under this scheme would depend on the incidence and severity of natural disasters and thus may not be quantified at this stage.
National Disaster Memorials
Payments are made by the Commonwealth Government to state Governments under specific criteria relating to the building of Disaster Memorials. The expenditure is contingent upon any commitment the Commonwealth Government may make in response to a disaster.
Employment National Ltd (EN) Board of Members Indemnities
Indemnities by the Commonwealth have been provided to EN board members to protect against civil claims relating to their employment and conduct as directors. These indemnities are unquantifiable and no expiry date has been set.
Letter of Comfort
A Commonwealth letter of comfort has been provided to EN to protect the Government’s investment in EN during the company’s restructuring. This letter of comfort indicates continuing financial support for the company. The Commonwealth’s exposure under these arrangements is unquantifiable.
Sale of Catering Services
The Commonwealth has indemnified Command Services Corporation Ltd and Delaware North Companies International Ltd against cost of claims by ex directors of CAC for loss of office, failures of due diligence with respect to assets and liabilities, cost of claims by former employees for superannuation payments, cost of certain tax imposts and claims arising from pre-sale management actions. The indemnities are ongoing and were issued in 1988.
Financial Statements
185
Financial Statements
Sale of Australian Airlines
The Commonwealth has indemnified Board Members and officials of Australian Airlines Ltd against false or misleading information provided by the Commonwealth relating to the airline’s operation resulting in litigation from prospective purchasers. The indemnity is open-ended and was issued on 28 May 1991.
The Commonwealth has indemnified employees of Australian Airlines Ltd against any civil action arising out of the disclosure of information. The indemnity is open-ended and was issued on 19 November 1991.
The Commonwealth has indemnified CS First Boston Australia Ltd against loss caused in proper performance of services. The indemnity is open-ended and was issued on 16 May 1991.
Australian Law Reform Commission (ALRC) employees
Notice of potential claims under the Commonwealth Funds Management (CFM) share sale agreement has been received from the Commonwealth Bank in relation to an action brought against CFM (among others) as successor to the former Superannuation Fund Investment Trust by certain employees of the Australian Law Reform Commission in respect of their superannuation entitlements. The Commonwealth has exercised its right to take over the defence of the action. The financial effect of this claim cannot be quantified at this stage.
Davis Samuel Case
The Department is subject to a counter claim in relation to legal action before the Courts. This matter is subject to sufficient uncertainty that it is not possible to quantify the amount, if any, of the liability. The Department is defending this case and believes no liability will arise.
Commonwealth shareholding in the Australian Submarine Corporation Pty Ltd
An indemnity was issued to Barry AC Hilson and BACH Pty Ltd in relation to liabilities arising from assistance provided to the Commonwealth during the conduct of a review of the Commonwealth’s shareholding in the Australian Submarine Corporation Pty Ltd. This indemnity is ongoing.
Note 34
Post balance date events
Pursuant to the settlement of the DASFLEET tied contract (refer note 6(a)), future leases of motor vehicles will be treated as operating leases.
DEPARTMENTOFFINANCEANDADMINISTRATIONANNUALREPORT 2000–2001
186
Comcover Insurance activities
General Insurance Activities (included in Note 4b—Suppliers expense)
2000–01 1999–00
Current Prior Total Current Prior Total
Year Year Year Year
$’000 $’000 $’000 $’000 $’000 $’000
Direct Business Expenses Gross claims incurred and related
expenses—undiscounted 30,132 (8,837) 21,295 18,922 (10,917) 8,005
Reinsurance and other
recoveries—undiscounted (15,247) 8,400 (6,847) (7,572) 4,662 (2,910) Net claims incurred—undiscounted 14,885 (437) 14,448 11,350 (6,255) 5,095 Discount and discount movement
—gross claims incurred (3,998) (1,476) (5,474) (2,907) 1,946 (961)
Discount and discount movement
—reinsurance and other recoveries 2,765 141 2,906 1,805 (1,418) 387
Net discount movement (1,233) (1,335) (2,568) (1,102) 528 (574)
Net claims incurred 13,652 (1,772) 11,880 10,248 (5,727) 4,521
Other Underwriting Expenses
Other Underwriting expenses 29,721 – 29,721 11,601 – 11,601
This represents Comcover’s first three years of operation. The claims have been calculated considering the emerging experience of the fund and relying on industry loss ratios, loss development and payment patterns which may or may not be representative of the ultimate performance of the fund. It is not possible, at this stage, to clearly establish to what extent industry experience will be applicable to the fund’s experience.
The claims background is:
Claims paid 2000-01 policy year—$1,760,996 Claims paid prior policy years—$2,268,622 Claims not settled—$16,138,509
Estimated claims incurred but not reported—$15,593,195